MPs demand tax cut for eco-friendly homes

Homeowners who fit energy saving devices such as solar panels and wind turbines to their houses should receive a discount on their council tax bills, a committee of MPs urges today.

The Commons Trade and Industry Select Committee says that householders who increase the value of their properties by making them more energy efficient should not be penalised by having to pay a higher rate of council tax.

The MPs also call on the Government and local authorities to do more to encourage individuals to cut greenhouse gas emissions from their homes by producing more low-carbon energy locally.

The Government's energy review last summer said that local power generationhad a big potential to cut UK carbon emissions and improve security of supply. But it also acknowledged that this form of energy generation currently met only 1-2 per cent of the UK's needs.

In their report, "Local energy - a strong future but not a short-term fix", the MPs describe local energy as "a developing concept with real potential". However, they warned that it was not a panacea for plugging the looming energy gap faced by the country and said there was an urgent need for conventional large-scale power stations to be replaced. The energy review calculated that the UK would need 25,000 megawatts of new generating capacity in the next two decades.

The committee is also critical of the "obsession" with low-carbon electricity as opposed to low-carbon heat which, it says, is three times more cost-effective as a means of reducing carbon dioxide emissions. The MPs point out that low-carbon heat is not eligible for subsidies under the Government's Renewables Obligation.

The report also voices concern that fewer than a fifth of local authorities have renewable energy targets in place.

A number of companies such as Centrica, the owner of British Gas, are running trials in homes with micro-generation boilers that produce both heat and electricity and export any surplus energy they produce into the local electricity grid. But full-scale commercial adoption of the technology is yet to take place - partly because of the cost.